If you often read news articles or blogs about investments or personal finance topics, you’ll notice they love to offer to consumers tips, advices, and how-to’s. They’re meant to be informative pieces. But have you ever wondered what the industry players may write and read amongst themselves?

Take for example, this article on Advisor.ca talking up the merits of life-cycle funds and how they may benefit the various distribution channels. That’s right, not investors but distribution channels! You shouldn’t be surprised that the mutual fund industry is all about sales. How else could you explain the number of funds existing and created each year? It’s like all the varieties of mp3 players that keep popping up. Just create a new variety and market it! And marketing is the key to winning this game! Therefore, fund companies have to market to distribution channels via such articles.

Let’s dissect some of the more memorable articles quotes in a tongue-in-cheek manner (a la Jon Stewart), shall we?

Life-cycle funds aim to reduce the workload of the distribution channel by automatically adjusting asset allocations according to a investor-selected target date for retirement.

Believe it or not, the majority of the time spent by a typical investment advisor or financial planner is not on tweaking your portfolio, but on getting new clients. Reducing the workload is key because less time fussing with your portfolio means more time out there prospecting potential clients.

There’s been more of an education and a learning process for advisors and their clients about how [life-cycle funds] will fit into portfolios

Ok, so advisors don’t know much more about new products than you do. But they do go through trainings provided by the companies. So I guess that makes up for the knowledge deficiency, right? It’s like a Ford broker learning about all the new features of the latest convertible model from… you guessed it — Ford! But they’ll be sure not to highlight the slow retractable roof or perhaps that you might have problems because you wear a toupee! One question, is the product good enough for the advisor’s own use? Otherwise, why would he recommend it?

Generally, these products remove asset allocation and rebalancing investment decisions that historically have been done by a planner or advisor, placing those calculations in the hands of the manufacturer, which automatically sets them according to a pre-determined time horizon for retirement.

So your advisor or planner really have no independent thought. They are merely brokers, or middle men between the fund company manufacturing these “products” and you. But why not? A one size fits all solution will work wonders for people who don’t want to care, right?

Once you determine the investor’s risk profile to see if this is suitable for investment for them, then you place them into their time horizon fund, and really it’s a one-stop shop in terms of getting them to that destination appropriately.

Have you ever walked into a bank, have whomever helping you give you a questionaire to fill out, and after looking at the score, they know exactly what you need? Don’t get me wrong. This cookie-cutter solution is good for the majority of the public. At least, it’s better than what they might have done themselves. What I’m saying is that once you’ve educated yourself, doesn’t everybody, everything and every process seem like The Matrix?

it’s the branch network that will see the appeal of the product. “It’s an ideal product for that type of sales force,

Maybe they should simply introduce themselves as “Hi, I’m John Doe. I’m the mutual fund salesman that will talk to you today about your retirement plans! What can we put you in today?”

I think the big winners of this sort of product would be the banks, [which] have the direct consumer who want the simple product, and not big asset levels

So I guess … the consumers and investors are not the winners?

Where it works for the advice channel is when you have advisor who doesn’t see himself as an investment advisor but more as a financial planner who isn’t trying to substantiate their fees with stock and fund picks, and who can use this is a turnkey product to allow [the financial planning] to happen

Again it’s more work to dish out advice. Let’s just plan for your future by putting you into this generic fund that I found out from a recent sales seminar. You’re not paying me to buy stocks and funds anyways so this will do just fine. This product should deliver decent enough return that you won’t be unhappy (but not necessarily happy) with me, and leave for another planner. I’ll see you next year and thanks for the fees! Please don’t hurt yourself as you walk out my revolving door. Who’s next on my prospect list?

Manufacturers are positioning the product as a way for advisors to save time on basic asset allocation, freeing up time to either prospect for more clients, or deepen their relationship with current clients with services and products that are more unique to his or her specific needs.

It’s a sales job all the way through. Do you ever wonder if an advisor is recommending a fund to you because it benefits you or it benefits him, freeing up his time to prospect for more clients? If you have a story where your advisor deepened their relationship with you, please share!

advisors weighing both the financial and opportunity costs of servicing clients with modest investable assets — say those with portfolios under $250,000 — against the time they could be spending prospecting and servicing clients with more to invest may consider many managed portfolios

Oops, last time I checked my account balance, I realized that I was put into a generic fund, and treated like a second-class investor because I can’t bring more fees to my advisor than Richie Rich. I guess I can’t blame them, it’s their livelihood, right?

Advisors managing even the most passive of portfolios using this product risk missing incremental opportunities that might arise every quarter,

Whaaaaaat?? Are we investing in an inferior product now? You mean if my advisor paid more attention to my portfolio, things could be different? And if you doubt the cookie-cutter approach, take a look at this next quote.

A risk-taking client may have the identical time horizon as a conservative client, but this product defines them as essentially one-in-the-same.

Here’s a two-parter quote:

Some manufacturers may look at life cycle funds as an opportunity to “repackage product”

Some firms may find it’s a good way to bundle strong funds together with long-standing dogs, to give them some fund in-flows.

I’ve often expressed my distaste for fund-of-funds. Those quotes showcase some of my reasons for disliking them. But I wonder if any advisor that recommended those funds to you ever disclose this information?

Okay, so I may have been a little sarcastic, a little cynical. Do make up your own mind. And when you’ve done that, do you mind sharing it with me in the comments below? Now if you’ll excuse me, I’m catching my daily dose of Jon Stewart!